WK Kellogg, the maker of popular cereals like Froot Loops and Frosted Flakes, saw its shares surge dramatically yesterday (Thursday, July 10, 2025) following media reports, including by Reuters, that Italian confectionery giant Ferrero, known for Ferrero Rocher and Nutella spreads, is close to acquiring the cereal producer. This potential deal could unite two of the world’s most recognizable consumer food companies, reshaping the packaged food market landscape.

Stock Surge and Premium Valuation

Shares of Michigan-based WK Kellogg soared by nearly 50% in pre-market trading, hitting $26.93. This marks the highest price for the stock since the company was spun off from its original parent, Kellogg, in 2023. As of the close of trading on July 9, the stock price was $17.50, but in pre-market trading on July 10, it had already climbed to $22.72, a jump of 29.68%.

The initial report on the talks, published by the Wall Street Journal on Wednesday, suggests that Ferrero could finalize the deal, valued at approximately $3 billion, as early as this week. WK Kellogg had a market capitalization of $1.51 billion at Wednesday’s close. Analysts at Jefferies noted that “the magnitude of the premium (is) a surprise – if accurate, hard to envision another bidder coming over the top or deal rejection.” This assessment indicates that Ferrero is offering a particularly attractive price, reflecting its belief in the potential synergies between the companies.

Ferrero’s Aggressive Acquisition Strategy and Business Fit

For Ferrero, the maker of Nutella hazelnut spread, this acquisition would represent its largest in recent years. The group, which has transformed into a global giant thanks to an aggressive acquisition campaign launched by its Executive Chairman Giovanni Ferrero, reported a turnover of 18.4 billion euros ($19.2 billion) for the fiscal year ending August 31, 2024. The company also reported increased investments to strengthen manufacturing capabilities and expand across various product categories. As an example of its past acquisitions, Ferrero bought Nestlé’s U.S. confectionery business for $2.8 billion in 2018.

For WK Kellogg, which essentially represents the North American cereal business of the original Kellogg after the 2023 spin-off, this deal could have a significant impact. Morningstar analyst Erin Lash commented that “with its focus on the mature, domestic cereal aisle, we’ve thought WK’s sales prospects would be muted, but believe a deal could enable it to benefit from Ferrero’s product and geographic reach.” An acquisition by Ferrero could provide WK Kellogg with the leverage needed for global expansion and diversification of product lines, leveraging Ferrero’s extensive manufacturing and distribution capabilities.

Market Challenges and Pressure on Packaged Food Companies

WK Kellogg, similar to other packaged food companies, has faced subdued demand due to cautious consumer spending in the U.S. This situation resulted from consistent price increases implemented by companies attempting to navigate higher input costs. In addition to economic challenges, packaged food manufacturers are under increasing pressure from entities like Health Secretary Robert F. Kennedy Jr.’s “Make America Healthy Again Commission,” which is lobbying to eliminate the use of synthetic dyes in food products. These demands require companies like WK Kellogg to invest in operational changes and product adaptation.

The potential WK Kellogg deal also comes at a time when its former parent company, Kellanova (maker of Cheez-It), is itself in the process of being acquired by candy giant Mars in a deal valued at nearly $36 billion. This volatility in the global packaged food market reflects the ongoing trend of consolidation and strategic shifts within this industry.

Summary: A Major Packaged Food Deal and Synergy Potential

Reports of Ferrero’s acquisition of WK Kellogg signal a significant strategic move in the packaged food industry. This deal, if it materializes, would unite two well-known consumer brands and grant WK Kellogg access to Ferrero’s global distribution network and expertise, particularly in areas of innovation and products. While WK Kellogg has grappled with demand challenges in the mature North American cereal market and faced regulatory and consumer pressures, its integration into the Ferrero group could open new avenues for growth and diversification. The move reflects the consolidation trend in the global food market and the pursuit of synergies and competitive advantages. This article does not constitute investment advice.